House Democrats may try to amend the estate tax provision of a bill that would extend Bush administration tax cuts for all income levels after the Senate acts on the measure early this week.
House Democrats may try to amend the estate tax provision of a bill that would extend Bush administration tax cuts for all income levels after the Senate acts on the measure early this week.
“I expect there to be some consideration of that,” House Majority Leader Steny Hoyer, D-Md., said during a media event Monday at the National Press Club in Washington.
At the same time, Mr. Hoyer didn't express any desire on the part of his colleagues to scuttle the bill, which will receive a crucial procedural vote in the Senate on Monday afternoon.
Continuing tax cuts for individuals who earn less than $200,000 and families that make less than $250,000 is a priority for Democrats.
“I think we're going to have a vote on the Senate bill, with possible changes,” Mr. Hoyer said.
He conveyed the uneasiness that many of his colleagues have about the estate tax portion of the $857 billion bill that would extend for two years the reduction in marginal tax rates — and a raft of other tax breaks — implemented in 2001 and 2003.
Under the bill, the estate tax would be set at 35% with a $5 million exemption. It also would reinstate the “step-up” in basis calculation for inherited property in which heirs could claim fair market value at the time of a relative's death.
That approach reflects a bill sponsored by Sens. Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark. Mr. Kyl was one of the GOP members who negotiated with the White House.
The House in 2009 approved an estate tax rate of 45% with a $3.5 million exemption. If Congress does not act by Dec. 31, the estate tax rate will zoom to 55% with a $1 million exemption, while marginal tax rates will return to their higher late-1990s levels.
Mr. Hoyer noted that the House-passed estate tax level has languished in the Senate for a year. His colleagues may try to amend the Senate version of the tax cut bill to make the estate tax provision more palatable to the left, which views it as a giveaway to the wealthy which will exacerbate the federal deficit and debt.
There “certainly seems to be some room for changes,” Mr. Hoyer said.
The approach the House takes will be influenced by a procedural vote in the Senate on Monday. If there's overwhelming support to move to a final vote (i.e., to break a filibuster), it might limit the House's latitude to change the bill. Any revisions would have to go back to the Senate for another vote.
Both chambers are trying to wrap up their lame-duck session by Friday.
Mr. Hoyer said that the House Rules Committee or its tax-writing Ways and Means Committee might try to revise the Senate bill.
“If they do so, we'll have votes on those amendments,” Mr. Hoyer said.
The votes might turn out to be a way for House Democrats to vent their spleen about the estate tax. Approving amendments, however, would be difficult. If all 179 House Republicans stay unified, it would take less than a majority of Democrats to approve the bill.
The chances of the bill's failing in the House look slim.
“Increasing the tax burden on working families will not be helpful in continuing to grow the economy,” Mr. Hoyer said. “In order not to see that happen, you have to get a bill through Congress and signed by the president.”
The product of an agreement between the Obama administration and Capitol Hill Republicans, the legislation also would provide a 13-month extension of unemployment benefits, a 2% cut in payroll taxes for workers in 2011 and many other provisions designed to stimulate the economy. It would maintain a 15% tax rate for capital gains and dividends.
--Bloomberg
